Topic: Stephen Reed's Million Dollar Logistic Model - page 21. (Read 123218 times)

This too.

This.

In the last week, bitcoin prices have dropped from $600 to under $500.

An hour ago I purchased some fractional coin from the Robocoin ATM close to my house. Looks like I will make another purchase tomorrow given the bargain prices available. There are two more Bitcoin ATMs in town made by Lamassu, I believe - and I want to try them out. It is so much fun to operate the machines that I like to spread out the purchases.

Here is a video about this particular ATM. Note that I am not a gun enthusiast, but welcome them to our community. I expect that eventually Bitcoin ATMs will become as numerus as bank ATMs. Hope you enjoy them as much as I do.

http://www.usatoday.com/media/cinematic/video/6304515/looking-to-purchase-a-bitcoin-head-to-the-gun-store/



Texas, USA observers may note that in this particular case the orange bitcoin logo color has been darkened a bit to exactly match the local University of Texas school color - burnt orange. Ha.

I dont support criminals.  I said Lehman & Bear didnt do anything illegal to cause their collapse.  I already said problems in banking is due to weak regulations.  We need MORE regulations not LESS

The problem w your bitcoin is these problems dont arise from arise from currency creation itself but from people outsmarting the system so they can profit.  People are corrupt not the currency.

You are naive if you think bitcoin offers anything other than an innovation in money transfer

[qoute] Banking is a cat & mouse game between bankers & regulators.  These bankers did nothing illegal.  [/quote]

Bitcoin is the mousetrap.

 LoL... now you're just trying to place some smoke and mirrors in front of me. After you posted that one liner right there I had to stand up and dance the boogaloo, twist and shout and I went over next door and high fived the neighbor!

I probably won't be able to respond to many more of your posts because I'm laughing too hard but here's just a smattering of a reply to your one-liner.

http://www.washingtonsblog.com/2013/03/stunning-crimes-of-the-big-banks-updated-list.html

http://www.nakedcapitalism.com/2012/10/why-it-is-essential-that-criminal-bankers-are-prosecuted.html

http://www.libertygoldandsilver.com/GoldandSilverBlog/?p=385

http://finance.fortune.cnn.com/2011/03/15/inside-job-director-on-geithner-goldman-and-criminal-bankers/

http://www.ritholtz.com/blog/2013/09/5-years-after-financial-crisis-big-banks-are-still-committing-crimes/

libor, robo-signing mortgages, inflated valuations so they could print more money, improper accounting of deeds/double spending, illegal repossessions... which is a trail of fraud from the top to the bottom!

http://www.appraiserspetition.com/ <- 11,000 appraisers tried to tell Congress of bank fraud OVER A DECADE AGO!

You want to build upon what we got now?


Instantly auditable 24/7 through the block chain. You're talking about the edges, I'm talking about the core.

I can show you evidence where banks are collecting and foreclosing on property they don't actually hold the deed for. What's that worth to eliminate the MERS pilfering organization who stole document fees from every state in the nation?

Bitcoin works at the core so enforcers can concentrate on the edges.

I believe the more the law understands bitcoin the more they will work to support it. Bitcoin benefits everyone but the sharks.

re:
And the bitcoin ATM certainly doesn't use WindowsXP where an estimated 95% of traditional ATM are still using XP!

http://money.cnn.com/2014/03/04/technology/security/atm-windows-xp/

re:
I believe there is enough evidence to prove that the existing system is fragile from the ground up. If not so, there would have been no need for QE in all its flavors since, what, 2008? If not so, the average lifespan of the dominant currency might be longer than 27 years.

http://georgewashington2.blogspot.com/2011/08/average-life-expectancy-for-fiat.html  

Even today, after all the bailouts, Citibank failed a 'stress test' - what's that supposed to mean anyway? How do we measure it when the most important ledgers were kept of the balance sheets.

I worked at a bank. I would read internal guidance on a regular basis. I learned that it was 'in the best interest of our customers' to get them on Libor, 'because it is more stable' - yeah... http://en.wikipedia.org/wiki/Libor_scandal - they left out the part where it was more stable for collusion and profit through theft.

I would regularly read guidance internally in the banks that was later echoed by Federal Reserve publications. Not only are banks ahead of the game but they rig it and plan its course, yet they still can't survive without extortionary tactics.

This was not fair to all the credit unions and small independent banks who were wise with their assets and leverage and still suffer the consequences through higher insurance costs and regulation - not to mention the damages to everyone else who's not a big bank.

I remember Greenspan saying in 2004 that adjustable rate mortgages 'might be the better deal' - http://usatoday30.usatoday.com/money/economy/fed/2004-02-23-greenspan-debt_x.htm - yeah... how'd that work out.

Start with an anti-fragile base and build on top of it. Just like Microsoft has chosen to stop supporting WindowsXP on April 8th, Bitcoin developers can dump the old code and build from the ground up with the goal of lasting more than 27 years.

You challenge one of the main features of Bitcoin. History shows that governments cannot resist printing money for themselves, or causing inflation to reduce the impact of government debt. The US Federal Reserve props up the banking system by creating money to loan at low rates to banks, and creates money to purchase toxic assets from them. Central control of Bitcoin, I believe, will be limited to prudent government regulations necessary to protect consumers, while encouraging innovation.

Because business cycles are currently related to credit expansion and contraction, a Bitcoin dominated economy may not need central banks to create money to prop up collapsed equity markets. A bitcoin economy is one in which credit as we know it will be replaced by something else. Loans cannot be easily made when denominated in a deflationary currency because the loan interest rate must be greater than the rate of deflation, which is currently about 10x annually. I think that future homeowners will rent-to-own rather than obtain 30 year Bitcoin mortgages. The monthly payments would be indexed to the rate of deflation.


According the economic principal popularized in Crossing the Chasm, it will be difficult for entrenched financial institutions to create new financial products that cannibalize their existing revenue streams. The US Federal Reserve has been pushing for immediate settlement of transactions but that is simply not good enough. Bitcoin's no-recourse feature makes settlement immediate. Bank card operators charge high fees to pay for the fraud that the current system allows and which Bitcoin prevents.


Good tip. I have used coursera before.


I am familiar with the stack model of software development, e.g. building RDF on XML, building HTTP over TCP/IP, etc. But Bitcoin startups are discarding the upper layers of the financial services stack and plugging in at the lowest possible level for a re-engineering of the system. For example, consider a Bitcoin ATM compared to a bank ATM. The Bitcoin ATM uses the internet to operate same as a bank ATM - but the Bitcoin ATM does not involve the vast overhead of the banking infrastructure. A bitcoin point of sale device likewise plugs into the cashier station in a manner similar to a bank card POS device. A Bitcoin wallet on a smartphone fits in a pocket in a manner similar to a conventional leather wallet holding bank cards.

Billions of individual Bitcoin users will be their own bankers but will not themselves be providing banking services to others. Bitcoin is programmable money that permits new financial services to be operated by third parties that add value to the system.

If indeed Bitcoin becomes the dominant financial instrument, then converting back to fiat would not be needed. For example, it is difficult for taxing authorities and public utilities to accept bank card payments from taxpayers and ratepayers because of the high merchant fees that cannot reasonably be passed on to the public. But Bitcoin is free for the receiver so when taxing authorities accept Bitcoin then the last reason to convert to fiat is gone.

Bitcoin is supposed to solve all the problems caused by the legacy financial infrastructure - the most severe of which I believe is the horrific misallocation of scarce resources given inflation, and the boom and bust business cycles caused by fiat-created credit.

One of the reasons I came to this board is because my old retired father got a tip somewhere to invest in bitcoins because "its the future of curency", "its like digital gold", "designed deflationary - always go up in price", etc..

I got so sick of hearing this drivel and thinking how all these unsophisticated folks will get suckered into it and lose their money.   It happens on Wall Street all the time w tech stock pumping.   Before that it was mortgages.   And before that it was internet stocks.  The worst are penny stocks and small & micro cap.   But at least w stocks we have fundamentals to use as price indicator.

I also have some background in economics and finance.   So I understand the finance/ banking system

The simple economic reason bitcoin will fail as replacing fiat.   It is not centrally controlled.   The power to adjust the supply of money is extremely crucial in order to maintain liquidity in money markets.  This didn't happen overnight it evolved to this stage through painful lessons of history.  Without this aspect bitcoin is inefficient as money.  

As a technology I think cryptocurrency has potential.   The public ledger aspect of it is extremely intriguing.  Bitcoins potential is in money transfer not as currency.   This is what GS and Buffett said and I agree.    I predict that in the future the banks will create some digital cash using public ledger idea.   But its not a separate currency but based on dollars in your bank account.   Thats what consumers want.   Something like M Pesa or Ripple

Anyways,  you seem like a smart guy.   Smarter than most of the bitbugs I've encountered or "believers" if using your semantics

I suggest you look into a coursera.org course called "economics of banking" taught by prof Merhling of Columbia U.  Theres no politics in this course.   Just banking,  how it functions,  its history.   I think you will understand money much more and how banking infrastructures weakness is not because Central Banking or fractional reserve banking.   It has more to do w regulations surrounding derivatives, prop trading,  shadow banking, etc.    Things that can't be solved by inventing a new currency

https://class.coursera.org/money-001
https://class.coursera.org/money2-001

If more crypto developers understood how money works then maybe the next iteration won't be so held back by immature politics or designed to be abused by speculators.  

If you want to design something useful,  then design it to work on top of what we have not replace it.   Why do you want millions of indiviual networked bankers?   Can they provide financial services like loans or credit?  Deal liquidity? Make markets?  Or are they there just to support the network for blockchain?  Why do you need a new curency when it has to be converted back to dollars?   I just don't get what problems bitcoin is supposed to solve

I agree with your viewpoint with regard to bubbles. Bitcoin prices get ahead of the fundamentals. I admit selling at the April 2013 peak and buying back during the ensuing collapse. There is an element of pump and dump going on - but I think that is not because Bitcoin is a scam but rather because when an asset goes from zero to potentially millions USD per unit, bubbles are going to be inevitable and is it not reasonable to expect that speculators will try to time them?

Yeah I tried reading that thread but the idea of using a formula to price a future is laughable.   

BTW I trade options so I know about how options price works and I know quite a bit about technical analysis.

One thing I can say is that most bubble charts have the same shape.    If you look at AAPL in 2012 compare it to FB,  TSLA,  AMZN today.      You'll find an uncanny similarity in there shapes.   With only a variance of 2-4 weeks.   Ive looked at past bubbles like MSFT,  YHOO,  NOK, CSCO too.   They have some resemblance to curent bubbles but slightly different.

Anyways by studying shapes of bubbles I predicted the top of TSLA,  FB,  NFLX they all crashed this week.   I believe AZMN is showing signs of bubble but not the top yet.   Same as GOOG

My theory is that bubbles are more technical than fundamental but the similarity is they disconnect from fundamentals and then eventually fundamentals pull them back into alignment.

I don't trade bitcoin so I don't know its chart.   But a sign of bubbles is when speculators invest on future market domination.   I believe they do this to justify their investment as well as recruiting greater fools so they can exit.  To me bitcoin smells exactly like a pump and dump.   

IMHO

I am not completely sure that Metcalfes law can used to price an asset class.

However, the stunning results posted by gbianchi and Peter R are sufficiently convincing, e.g. the close alignment of the data series in Peter R's graph, make me very interested to see just how the law can indeed apply. Especially considering much headroom the Bitcoin economy has with regard to transaction quantity growth over the next seven years.

You might get a stronger explanation by posting your issue in gbianchi's thread linked earlier.

Well yes, all peers on the network can speak Bitcoin. My hypothesis is that when considering the likelihood of connections between peers, i.e. the likelihood of a transaction between two addresses, the entire future Bitcoin network will be partitioned somewhat into clusters of addresses more likely to participate in transactions. For example, walk-in local merchants will have transactions with local walk-in customers, but are much less likely to participate in transactions with far away customers.

If someone can convince me that within 7 years Bitcoin entails the economic version of the Singularity, please do so. Otherwise I believe that Metcalfe's Law must eventually disconnect from explaining bitcoin prices given daily transaction quantity and addresses quantity.

Thanks! I received permission from Peter R to post his graph. And I will abide by your wishes regarding on-topic relevant material from other threads.

But if everybody on the network can speak Bitcoin ....

Nice chart, very insightful. Thanks for bringing it to our attention.
Slippery, please continue to post anything you might find interesting from the other threads here.

Sorry that I was not sufficiently clear. By way of example lets look at the worldwide email system. Every email client can reach any other email client by email address - just like Bitcoin. But if China was suddenly subtracted from the email system, it would not make my email service worth a lot less because I cannot communicate in Chinese. The worldwide email system has small world effects in that well connected nodes, i.e. nodes that might send messages to one another, are partitioned by natural languages that the users understand.

By well connected, I mean that a node has a reasonable probability of reaching another node in the network - not that it merely possible to reach that node.